UBI creates opportunity for insurers to partner with automakers

UBI creates opportunity for insurers to partner with automakers | Insurance Business

Lots of new cars now come equipped with connected features or advanced driver-assisted systems (ADAS) – and this is changing the way auto insurers handle policies.

Traditionally, auto insurance policies have been based on driver characteristics like demographics, personal information and history. With the emergence of usage-based insurance (UBI), insurers have started to incorporate driving behavior data such as speed, hard braking and other contextual factors.

As drivers become more aware of the benefits of advanced safety and connectivity features in new cars, this creates new opportunities for automakers to partner with insurers to increase adoption of UBI and other telematics-driven offerings.

“Automakers and insurers are in a rare relationship in which they share virtually all of their customers – all auto owners (except those who are uninsured) have auto insurance, and all auto insurance policyholders own vehicles,” said David Lukens, director of telematics at LexisNexis. “By sharing information about these shared customers, insurers and automakers can enhance their relationships with the customer and drive a better overall car ownership experience.

“There are many facets of vehicle ownership that impact both the automaker and the insurer, such as: vehicle condition, unaddressed recall and maintenance issues and vehicle ownership patterns. The original equipment manufacturer (OEM) and insurers can work together to ensure that their customers are operating their vehicles in the safest and most cost-effective manner.”

But regardless of whether a driver purchases a vehicle for its specific features, the survey found that 76% of ADAS car owners and 65% of connected car owners had a more favourable opinion of ADAS and connected cars after personally experiencing the features in their car.

“Consumers seek out products and services that make their lives easier, safer and add value, so drivers are ready for and desire connectivity in their vehicles, and they are even willing to share their driving information because they see the value that ADAS and connectivity can deliver,” said Pavan Mathew, director of OEM at LexisNexis Risk Solutions.

“The study revealed that the more engaged consumers are with ADAS and connectivity, the more favourable their opinions of UBI. Working together, insurers can leverage this attitude shift to drive UBI adoption while automakers can use the information to develop more valuable products and services that their customers want.”